Illinois’ poorest hit hardest by COVID-19 job loss, many still unemployed

Illinois households earning less than $40,000 were four-times as likely to lose their jobs from February-April 2020 and nearly 11 times as likely to still be out of work compared to those earning $75,000 or more.

As Illinois tries to rebuild after the worst year for jobs in state history, low-income Illinoisans find themselves even farther behind than others. Job losses suffered during COVID-19 and state-mandated mitigation protocols disproportionately fell on these families.

Jobs were lost by 36% of workers in households earning less than $40,000, according to estimates from the Current Population Survey from February 2020 to when job losses reached their peak in April 2020. These Illinoisans were twice as likely to be put out of a job compared to the average worker.

A quarter of workers from households earning from $40,000 to under $75,000 lost their jobs, while 9% of those from households earning $75,000 and above lost their jobs. Those earning less than $40,000 were four-times as likely to lose their jobs.

Not only did they suffer more at the pandemic’s peak, but low-income Illinoisans are nearly three-times more likely to still be out of a job compared to the average Illinoisan. More than 21% of those in households who earn less than $40,000 remain unemployed, while 11.5% of Illinoisans in households earning between $40,000 and less than $75,000 are still without a job.

Only 2% of workers in households earning $75,000 or more are still out of a job, meaning that households earning less than $40,000 are nearly 11-times more likely to be out of work, widening the income inequality gap.

Those most affected by COVID-19 and state-mandated mitigation measures are not just of lower incomes, but are also more likely to be women and ethnic and racial minorities. Women were nearly twice as likely than men to still be without work in December while Black Illinoisans were nearly 50% more likely to still be out of a job compared to their white counterparts.

The weak recovery Illinois is currently grappling with was anticipated. That is because COVID-19 and state-mandated mitigation measures disproportionately affected those who couldn’t work from home and struggle most to find steady employment: workers with fewer years of schooling along with women and minorities who already tend to earn less than other workers and are less likely to have strong labor market attachment.

COVID-19 made things worse for everyone – but even more for lower-income households. Although a win against COVID-19 will help Illinois’ struggling economy, it will not fix the damage done by decades of fiscal mismanagement and corruption in Springfield.

By pursuing reforms that address the root cause of Illinois’ economic crisis, Illinois can solve its fiscal problems, protect core services, improve outcomes for all Illinoisans while also undoing decades of persistent income inequality. A constitutional pension amendment would free up billions of dollars in future state budgets.

State lawmakers should pursue the following:

• Increase the public pensions funding target to 100% from 90% in accordance with actuarial best practices. The goal year for 100% funding would remain 2045.
• Gradually increase retirement ages for current workers under age 45 by a maximum of five years.
• Apply a pensionable salary cap of $100,000 that grows with inflation. Government workers could still earn more than $100,000, but their pensions could not be based on more than the cap. The cap would only apply to employees not currently receiving a retirement check.
• Replace Tier 1 retirees’ 3% compounding benefit increase with true cost-of-living adjustments tied to inflation. Annual increases would be simple, not compounding, and rise with the consumer price index for urban consumers, as reported by the U.S. Bureau of Labor Statistics.
• Increase Tier 2 COLAs from half of inflation to full inflation. This would end the unfair subsidization of older workers by younger workers and could prevent a potential lawsuit.
• Implement COLA holidays to allow inflation to catch up to past benefit increases. If a worker has been retired for eight years or more, they would skip every other year for 16 years for a total of eight adjustment periods at 0%. If a retiree has been receiving benefits for seven years, they would skip one adjustment every other year for 14 years, and so on.
• Enroll all newly hired employees in a defined contribution personal retirement account with a 4% guaranteed employer match. This would ensure the state never gets into pension trouble again. This would also provide state workers with a portable retirement benefit they could take with them from employer to employer, rather than being forced to stay with the state in order to maximize retirement benefits.

Without pension reform that frees up resources for desperately needed investments in struggling Illinois communities, fixing disparities within Illinois may never materialize. Young families will continue to flee, and the state’s economy will suffer longer than it needs to.